Taipei Times (TT): Hon Hai Precision Industry Co Ltd (鴻海) sold Vizio-brand 60-inch TV sets during the Christmas period in the US at US$688 per unit. This was generally viewed a cutthroat deal.
Since Amtran (瑞軒) owns a 23 percent stake in Vizio, what do you think about Vizio’s pricing and products strategy?
Alpha Wu (吳春發): It is not worth making such budget deals.
It is a gambit. The deep price cuts [about 20 percent to 30 percent] will have an adverse impact in the first place, rather than being a boon, since its peers did not follow suit.
TT: Some news reports said consumers returned many of those TVs because of component defects. What is your view on this?
Wu: We do not know if the reports were true. We did not make those 60-inch TVs for Vizio, but I think a high return rate will bring high costs to any company and will eventually become a financial burden. Amtran products have a return rate of less than 1 percent.
TT: NPD DisplaySearch’s latest data showed global LCD TV shipments fell 1 percent last year to 203 million units, marking the first annual decline. What is Amtran’s business outlook for this year and what are your views about the prospects of the global LCD TV market?
Wu: We aim to increase shipments by 20 percent annually this year.
Currently, Amtran makes TVs for Vizio, Japanese brand JVC and some Chinese TV vendors. This year, we are expanding our business to Europe and we are scheduled to ship the first batch of these TVs to German clients in July [at the earliest]. We do not expect revenues from Europe to become significant this year.
Regarding the worldwide TV market, it is certain that the market will rebound in the second half of the year, supported by seasonal demand.
However, it is difficult to tell which market will see strong growth. India might have the potential to outgrow other regions, primarily because of replacement demand for bulky cathode-ray-tube TVs. India is a tough market and consumers there cannot always afford pricey products. We do not plan to enter that market yet. We plan to expand our businesses overseas step by step. This year, we are targeting Europe.
TT: Amtran sells Vizio TVs in Taiwan. What is this year’s business target?
Wu: Taiwan is a small and competitive market with annual sales of about 1 million units. We aim to double Vizio’s unit sales this year. We will launch promotional campaigns later this year. We sold 50,000 units of Vizio TVs last year and expect to increase the figure to 100,000 this year.
We are very confident that Vizio will enter the top three of the TV segment of slim screens bigger than 32-inch in terms of sales.
TT: There is plenty of media hype surrounding new ultra-high-definition 4k2k TVs. Do you expect 4k2k TV to prevail soon? (4k2k TVs deliver four times higher definition pictures than full high-definition TVs.)
Wu: 4k2k TVs are still very expensive. Prices are still three times to five times higher than for average flat-screen TVs with the same size screen.
Consumers will not go for those TVs until prices go down.
Besides, there is the lack of ultra-high definition to underscore the value of such pricey TVs.
Still, we expect that a growing number of 4k2k TVs will hit the market by the end of the year. Amtran will launch a series of 4k2k TVs by that time.
TT: Will the escalating tensions on the Korean Peninsula cause any disruption in the supply of key electronic components?
Wu: Most TV manufacturers have component inventories ranging from three weeks to six weeks. If a war breaks out, but is limited to the [Asia-Pacific] region, the chances of disruptions in component supply will be slim.
Taking flat panels as an example, a war, if it did happen, would only cut some panel supplies and boost panel prices.
However, there will be no supply crunch, since there are many panel suppliers around the world.
TT: Since LCD panels account for a major part of Amtran’s raw material costs, will you make any changes to your panel purchasing strategy this year?
Amtran chief financial officer Scottie Chiu (邱裕平): We are diversifying our panel suppliers this year. South Korea’s LG Display Co as well as Taiwan’s two biggest panel makers, Innolux Corp (群創) and AU Optronics Corp (友達), have been our main suppliers in previous years.
However, we are considering buying LCD panels from Sharp Corp in the second half of the year as the weak yen will help us reduce costs. This would be the first time we source panels from Sharp.
Besides, we are also thinking about increasing orders of 32-inch LCD panels on China’s two biggest panel makers [BOE Technology Group Co (京東方) and China Star Optoelectronics Technology Co (華星)], given their lower prices.